Hydrogen microgrid in the distributed energy market: Challenges and Opportunities

Abstract

The widespread adoption of green hydrogen is primarily hampered by high costs, followed by a classic market coordination failure: the absence of guaranteed demand discourages investment in production facilities, and vice versa. To address this, we have developed and applied an integrated analytical framework to identify actionable pathways for market creation. Our mixedmethod approach combined a literature review, semi-structured expert interviews (n=12), and a detailed techno-economic case study of a proposed hydrogen microgrid in Saxony-Anhalt. The analysis quantified and prioritised key barriers, revealing that the high cost of green hydrogen is a primary hurdle exacerbated by regulatory uncertainty and insufficient funding mechanisms.  A resimulation of a real-world project presented in this research shows a hydrogen production cost of 3.91 €/kg. We conclude that green hydrogen is not economically viable unless supported by a government’s synergistic policy package combined with a targeted financial de-risking mechanism and streamlined regulations. This research provides a validated, multi-stakeholder framework for policymakers and investors to prioritise interventions in nascent hydrogen economies.